IRR Calculator Nigeria — Internal Rate of Return

Internal Rate of Return (IRR) is the discount rate at which the Net Present Value (NPV) of an investment equals zero. It represents the effective annual return on your investment. If IRR exceeds your cost of capital or minimum required return, the investment creates value. Nigerian investors typically require IRR above 20–25% to beat inflation and alternative safe investments.

Given Nigeria's inflation rate (typically 18–30%) and treasury bill rates (15–20%), a good IRR for a business investment should be at least 25–35%. Real estate investments often target 15–25% IRR. Venture capital and startup investments aim for 40%+ IRR to compensate for high risk. Compare your IRR to what you'd earn in a fixed deposit or treasury bill.

ROI is a simple ratio of total profit to investment, ignoring time. IRR accounts for the timing of cash flows — money received earlier is more valuable than money received later. A project with 50% total ROI over 5 years has a very different IRR than one with 50% ROI over 2 years. IRR is a more sophisticated metric for comparing investments of different durations.

IRR cannot be computed if all cash flows are negative (no return) or if cash flows change sign multiple times (multiple IRR problem). If your cash flows have multiple sign changes, consider using Modified IRR (MIRR) instead, which assumes a reinvestment rate for positive cash flows and a financing rate for negative ones.

Yes. For property investments, include the initial purchase cost as a negative Year 0 cash flow, annual rental income as positive flows, and the projected resale price in the final year. This gives you the total real estate IRR including both rental yield and capital appreciation.